Ramaphosa and business must answer why 8 months after the summit the economy is shedding jobs and hardly creating new ones writes Kabelo Khumalo.
JOHANNESBURG - Early this year an imaginary men’s conference took social media by storm as South African men conjured up the fictitious event in a failed attempt to escape Valentine's Day.

This is what came to mind when Statistics South Africa this week said 237 000 people lost their jobs in the three months ended in March, despite a Jobs Summit that was held amid much fanfare by President Cyril Ramaphosa last year.

The question that Ramaphosa and business must answer is why eight months after the summit the economy is still shedding jobs and hardly creating new ones?

Ramaphosa must resist the temptation to fall for the affection showered on him by business without concrete steps to assist him in reconstructing the economy.
South African are not in the mood for imaginary social compacts, but partnerships that derive benefits to the masses. 

It is well and good to sit with the captains of industry and persuade them to create and save jobs, but it serves no purpose if the government does not hearken to concerns of business and relax our restrictive labour laws.

This is the Achilles heel of Ramaphosa’s new dawn -  his close proximity with the out of touch Cosatu and capitalism weary South African Communist Party (SACP) means a long night for South Africa’s unemployed youth.

It was the same SACP that took issue Thabo Mbeki’s 'pro-capitalist' policies that left the country with unemployment at just more than  20 percent. Today, joblessness in the country stands at 27.6 percent, excluding those who have simply given up on finding a job. 

The 10 million South Africans who put their Xse next to Ramaphosa’s grinning face in this year’s elections did so with a clear clarion call: “We want jobs”.

The decline of ANC support across the board means that Ramaphosa has a five-year window of opportunity to implement far-reaching structural reforms that will make it easier for businesses to employ more people and small enterprises to thrive.

The state's multi-billion rand procurement budget should be overwhelmingly channelled to such enterprises to allow them to innovate and create more jobs. 

While the term structural reform has become so chaliced in South Africa, it is worthy to decode what economists mean when they say the country must embark on such a restructuring programme.

Structural reform involves implementing policies that can improve both human and institutional capabilities in order to generate higher and sustainable growth rates. 

The dilly-dallying of the past administrations in executing reforms leaves Ramaphosa with an even bigger responsibility to act swiftly because history has shown that structural reforms can take a long time to bear fruit and manifest in higher growth and more jobs.

The lack of structural reforms in the past has seen the country caught up in a low-growth trap. Ramaphosa must aggressively address the deep constraints that will lift output in sectors such as mining, agriculture, manufacturing, services and construction, and improve the ability of these sectors to generate jobs.

The OECD, in its 2013 Report on South Africa, raised labour and product market rigidities as the main constraints to faster economic growth and employment creation.  The message to Ramaphosa is clear:  reforms cannot wait.

Ramaphosa knows where the constraints are: they includes a regulatory environment not conducive to private investment, labour market rigidities, insufficient competition in product markets, corruption and policy uncertainty.  He must get on with the job and implement the required reforms if he is to fulfil his promise to the electorate to create 275 000 jobs annually.

Both his government and business should take proactive steps to re-train workers and provide opportunities for them to learn new skills at all stages of their careers. Regulations should also be flexible to encourage workers to migrate toward growing segments of the economy and a safety net should be strengthened for those who need extra help to re-skill themselves during the economic transformation.

While capitalism has been incredibly effective at creating prosperity and improving the standard of living for many, the time has also come for it to reform.
Its weaknesses, like the exploitation of labour, profit- and shareholder-centric orientation, short-termism means the system itself must adapt to survive.

There is no arguing that business loves Ramaphosa. But it will not invest in the economy just because they love the occupant of Union Buildings. It will do so only when it sees that structural reforms have made investments worth their while and have enhanced confidence in the economy.

The time for summit and conferences that does not yield any tangible results for people on the streets will dim the prospects of the new dawn.

Structural reforms are, by their nature, politically unpopular. But South Africa needs a head of state that will go against the tide to grow the economy.

Failure to significantly dent the marauding joblessness will likely mean that Ramaphosa will be a one-term president.

BUSINESS REPORT